Aug. 9 (Bloomberg) -- The cost for European banks to borrow in dollars declined to the lowest in more than a year, according to a money-markets indicator.
The three-month cross-currency basis swap, the rate banks pay to convert euro interest payments into U.S. dollars, was 33.5 basis points below the euro interbank offered rate, or Euribor, at 9:30 a.m. in London, from minus 37 yesterday. It’s the lowest cost since July 25, 2011.
The one-year basis swap was 38.5 basis points below Euribor, the lowest since Aug. 3, 2011, from minus 39. A basis point is 0.01 percentage point.
The three-month Eonia OIS swap was at 7.2 basis points, compared with 7.4 yesterday, according to data compiled by Bloomberg. The European Banking Federation’s euro overnight indexed average, or Eonia, of unsecured lending deals was set at 11.6 basis points yesterday, the highest since July 23, from 11.1 the day before.
Banks cut overnight deposits at the Frankfurt-based European Central Bank to 278 billion euros ($344 billion) yesterday, the lowest since Dec. 21, from 317 billion euros the day before.
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